Oil prices stabilized after plumbing 11-year lows earlier in the week. Gold is positively correlated to oil as the metal is seen as a hedge against oil-led inflation.

Gold has recovered from the losses that followed last week’s move by the Federal Reserve to raise interest rates for the first time in nearly a decade, largely on short covering.

But the outlook for bullion remains bearish, with the Fed set to hike rates further next year and energy markets poised for more declines.

“The Fed would be quite keen to continue monetary policy tightening, albeit only gradually over 2016, followed by a faster pace in the following years,” Societe Generale said in a note late on Tuesday, adding that this would strengthen the dollar and hurt gold.

Low inflationary pressures in the Unites States and elsewhere, due to depressed energy prices, will also limit interest in gold, Societe Generale said.

Investor sentiment towards gold remains bearish. Assets of the top gold exchange-traded fund are near a seven-year low. Short positions on COMEX are at a record high, according to recent US government data, though that could also trigger some near-term short covering.

Several brokerages have predicted that gold will drop below $1,000 an ounce next year.

Support for gold from physical markets also looks bleak. In top consumer China, there are fears of a protracted loss of confidence among buyers, with many predicting that demand could fall for a third year in 2016.

Trading is expected to remain quiet as liquidity thins ahead of the Christmas holiday. Japanese markets were closed on Wednesday.

The dollar was little changed in Asian trading on Wednesday, following a three-day losing streak, after data overnight painted a mixed picture of the US economy, offering some support for gold.

US home resales posted their sharpest drop in five years in November.

Other data on Tuesday showed the US economy grew at a fairly healthy clip in the third quarter as strong consumer and business spending offset efforts by businesses to reduce an inventory glut.